Tax Day Open Thread

Today is April 15th, one of the worst days of the year for Americans. It’s the day that the tax man comes calling. If you’re lucky, you’re getting a refund. If not, you owe the government. The problem, of course, is the tax code. Taking up over 57,000 pages, the taxcode is altered yearly. Pieced together and never built with a cohesive, all-encompassing forethought, it is filled with complications and confusion.

Clearly, the tax system in this country needs to be rebuilt. Ground up. Simplified. I, for one, support the idea of a flat tax, but I understand that some call that regressive, so I’m open to ideas. Something needs to happen though.

In the comments below, sound off on your feelings on the tax system in the U.S. Comments will only be moderated if things get too personal or hateful, but otherwise, I’m staying out. This is your time to be heard, and I guarantee, this post is being watched by politicians, and media organizations. Around the nation, today, the Taxpayer Teaparty movement is also occurring. While, I share some of the concerns and motives of the Teaparty movement, this action is not to be construed as associated with that movement.

With that said, the mic is now open.

12 Replies to “Tax Day Open Thread”

  1. The complexity is what kills me… get any four accountants to handle a return and you get four different amounts along with a flood of caveats and notes. The cynic in me would call the current tax code a “Accountant Jobs Protection Act”.

    But on top of that, think of how much time and money is burned every year through this. The past four years, I’ve spent 10-15 hours each year (I track my time with web2project) preparing my taxes. Even if I sent it off to an accountant, there would be prep work and handing off information. With a workforce of approximately 145M, just a couple hours adds up to huge amounts.

    Add to that the paper and energy required… anyone coming from a Green/conservation perspective can’t look at the reams of paper – 25+ for me personally – and think that this is a good idea. Instead of turning off our lights one hour on one Saturday once a year, why not reduce this paperwork to the back of a postcard?


  2. Part of the problem stems from our use of the tax base to address social and political aims, like wealth redistribution and encouraging consumption. A flat tax with few deductions would be so much easier for everyone involved but wouldn’t make people feel like the rich were punished enough or wouldn’t encourage families to have kids to ensure a future tax base.

    Clearly the tax code’s complexity is a huge drain on resources of the country. Assuming that the recent political appointees had the best of intentions, that people in their position can screw up and “forget” to pay taxes seems to illustrate the problems. If people so successful as to warrant cabinet positions can’t get it right, who can?

  3. My problem with the flat tax would be that you would either be charging people with no money, or overtaxing consumption and discourage consumer spending which currently drives out economy. Messy ideas like prebates and pre-credits which come with some forms of the flat tax seem to be rather poorly thought out and force the government to spend money before it can collect it.

    That said, the current tax system definitely needs to be simplified and purged of things clearly inserted into it via lobbyist influence. If we can make it easier to comply, close obviously unnecessary loopholes and streamline rules, maybe we can even cut taxes with all the money we’d save. But then again, I’m somewhat of a dreamer…

  4. My thoughts on the tax system are directly proportionate with my thoughts on politicians in general.

    Let’s take one local example: Maryland taxpayers will now pay the mortgage on the failed (historic) Senator Theater, HOWEVER the Maryland State government did NOT pass the bill that would give production companies tax incentives that would bring them back to Maryland to shoot movies and tv shows – a move that would actually CREATE jobs and inject real money into our local economy.
    So what is the tax message Maryland is sending out today?
    ‘NO’ to REAL opportunity for economic stimulus & ‘YES’ to another bailout.
    Thank you O’Malley. Thank you Maryland. Somebody get me a bleepin’ tea bag.

    How can they simplify the tax code when they can’t get something as simple as THAT right?

  5. If I could make one change to the code it would be to make everyone physically write a check to the government instead of having the money automatically withheld from their paychecks. Ask any independent contractor or small business who has to do this quarterly and they’ll tell you it forces them to think long and hard about where every dollar goes.

    The current system is built on an “out of sight – out of mind” philosophy and compounds it by giving 100+ million folks a refund (YAY! Free money!!! right?) once a year. Few people really know how much they pay and their only interaction with the IRS is when they actually receive money.

    Make people write a check once a month or so and when they start comparing that to their grocery bill, rent/mortgage, entertainment expenses, etc. I bet more people will pay attention to government spending.

    I also think it is borderline frightening that we’re fast approaching a scenario where more than 50% of Americans will pay no taxes at all, but that is something for another post altogether. What will that do to democracy?

  6. I agree with Jeff D 100%.

    Okay… so if “simplifying the tax code” is out of the question, why not just have everyone pay monthly/quarterly? For the people who always get a refund, they never would have sent the money in… lots of saved time and no interest-free loan to the government. And for the (shrinking percentage of) people who pay, we’ll see exactly how much and when.

    For the record, I’m one of those small business guys that already pays quarterly and have argued in favor of this modification since I started doing side consulting in 2001/2002.

  7. Flat tax! I agree, you can still give benefits and opportunities to those in need, but simplify the system. The more people earn, the better they do. I am big on allowing the successful to become more successful so that they can continue to create jobs and stimulate the economy at a faster pace.

  8. I owed for almost every year when I first got out of the Army. It was a pain. Now, even though I am making more, I have been doing better on doing things that get me the line-item deductions to actually get money back. In fact, this year I am getting more back than I have ever gotten.

    But I digress, it is so confusing to do the taxes, even online. I had to do them not only for me, but someone else this year. I can’t live with screwing up mine, but not someone I love.

  9. I would really like to see the loopholes closed that allows so many wealthy people to pay no taxes at all. I have been most annoyed for a long time with having to pay what I consider more than my “fair share.”

    I don’t mind paying my “fair share” but I wish everyone else would pay theirs, too!

  10. “I would really like to see the loopholes closed that allows so many wealthy people to pay no taxes at all.”

    This has been tried numerous times… one of them is called the Alternative Minimum Tax (AMT). It was specifically designed to catch about 150 people who didn’t pay “their fair share” and now hits upwards of 10% of the taxpayers.

    Whenever you craft laws that “target” specific individuals/professions/industries, you’re putting dangerous powers in the hands of these guys… powers that will be used later on by people you don’t agree with.

  11. My thought as I was struggling through my tax mess with the help of software is that why do our taxes have to be so complicated? Even with the aid of my software and all the questions it asked me I still feel like I could have screwed up half a dozen things. If I get audited, my defense will be that I really couldn’t make heads or tails of the whole tax mess.

  12. The complexity of the tax code has nothing to do with flat versus progressive taxation, and it has everything to do with calculating the amount of taxable income.

    The “flat = simple” meme is very persistent because it gets plenty of funding from those it would benefit.

    The current tax code is overly complex, but a flat tax won’t fix it.

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